Powerchip says its plant is still making money in Taiwan so there's no need to move it to China right now

Taiwan's largest DRAM maker, Powerchip Semiconductor, on Monday denied a local media report that it planned to build a chip factory in China with a Japanese partner.

The Chinese-language Commercial Times newspaper said Powerchip had invited Japan's Renesas Technology to jointly invest in a chip factory in China. Renesas and Powerchip currently work together in technology and chip production outsourcing pacts.

Powerchip said it isn't making any China plans right now because it's too busy.

"This is just a rumor, nothing has been done yet," said Eric Tang, a vice president at Powerchip.

Powerchip has already gained approval from the Taiwan government to invest in China, but one of the rules requires it to move used equipment from an old factory in Taiwan to its new China plant, instead of buying new machinery. The trouble is that orders at Powerchip are too brisk to consider such a move, Tang said. The company's older chip plant, called an 8-inch plant due to the size of the silicon wafers used to make chips on, is still making money in Taiwan so there's no need to move it to China right now, he said. Powerchip may buy used equipment from elsewhere and move it to China instead of using gear from its own 8-inch plant, he said. The company has no plans to move forward on the project in the near term.

Taiwan and China remain enemies after splitting in 1949 amid civil war, the reason Taipei carefully regulates high tech investments to the mainland. Despite their strained relationship, China remains the favored destination for Taiwanese investment due to their shared language and culture, as well as China's lower costs and incentives for building factories.